Credit Card Guide, Estate Planning

An Overview of Filial Responsibility Laws

Father in a wheelchair and son outsideTaking care of aging parents is something you may need to plan for, especially if you think one or both of them might need long-term care. One thing you may not know is that some states have filial responsibility laws that require adult children to help financially with the cost of nursing home care. Whether these laws affect you or not depends largely on where you live and what financial resources your parents have to cover long-term care. But it’s important to understand how these laws work to avoid any financial surprises as your parents age.

Filial Responsibility Laws, Definition

Filial responsibility laws are legal rules that hold adult children financially responsible for their parents’ medical care when parents are unable to pay. More than half of U.S. states have some type of filial support or responsibility law, including:

  • Alaska
  • Arkansas
  • California
  • Connecticut
  • Delaware
  • Georgia
  • Indiana
  • Iowa
  • Kentucky
  • Louisiana
  • Massachusetts
  • Mississippi
  • Montana
  • Nevada
  • New Jersey
  • North Carolina
  • North Dakota
  • Ohio
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Dakota
  • Tennessee
  • Utah
  • Vermont
  • Virginia
  • West Virginia

Puerto Rico also has laws regarding filial responsibility. Broadly speaking, these laws require adult children to help pay for things like medical care and basic needs when a parent is impoverished. But the way the laws are applied can vary from state to state. For example, some states may include mental health treatment as a situation requiring children to pay while others don’t. States can also place time limitations on how long adult children are required to pay.

When Do Filial Responsibility Laws Apply?

If you live in a state that has filial responsibility guidelines on the books, it’s important to understand when those laws can be applied.

Generally, you may have an obligation to pay for your parents’ medical care if all of the following apply:

  • One or both parents are receiving some type of state government-sponsored financial support to help pay for food, housing, utilities or other expenses
  • One or both parents has nursing home bills they can’t pay
  • One or both parents qualifies for indigent status, which means their Social Security benefits don’t cover their expenses
  • One or both parents are ineligible for Medicaid help to pay for long-term care
  • It’s established that you have the ability to pay outstanding nursing home bills

If you live in a state with filial responsibility laws, it’s possible that the nursing home providing care to one or both of your parents could come after you personally to collect on any outstanding bills owed. This means the nursing home would have to sue you in small claims court.

If the lawsuit is successful, the nursing home would then be able to take additional collection actions against you. That might include garnishing your wages or levying your bank account, depending on what your state allows.

Whether you’re actually subject to any of those actions or a lawsuit depends on whether the nursing home or care provider believes that you have the ability to pay. If you’re sued by a nursing home, you may be able to avoid further collection actions if you can show that because of your income, liabilities or other circumstances, you’re not able to pay any medical bills owed by your parents.

Filial Responsibility Laws and Medicaid

Senior care living areaWhile Medicare does not pay for long-term care expenses, Medicaid can. Medicaid eligibility guidelines vary from state to state but generally, aging seniors need to be income- and asset-eligible to qualify. If your aging parents are able to get Medicaid to help pay for long-term care, then filial responsibility laws don’t apply. Instead, Medicaid can paid for long-term care costs.

There is, however, a potential wrinkle to be aware of. Medicaid estate recovery laws allow nursing homes and long-term care providers to seek reimbursement for long-term care costs from the deceased person’s estate. Specifically, if your parents transferred assets to a trust then your state’s Medicaid program may be able to recover funds from the trust.

You wouldn’t have to worry about being sued personally in that case. But if your parents used a trust as part of their estate plan, any Medicaid recovery efforts could shrink the pool of assets you stand to inherit.

Talk to Your Parents About Estate Planning and Long-Term Care

If you live in a state with filial responsibility laws (or even if you don’t), it’s important to have an ongoing conversation with your parents about estate planning, end-of-life care and where that fits into your financial plans.

You can start with the basics and discuss what kind of care your parents expect to need and who they want to provide it. For example, they may want or expect you to care for them in your home or be allowed to stay in their own home with the help of a nursing aide. If that’s the case, it’s important to discuss whether that’s feasible financially.

If you believe that a nursing home stay is likely then you may want to talk to them about purchasing long-term care insurance or a hybrid life insurance policy that includes long-term care coverage. A hybrid policy can help pay for long-term care if needed and leave a death benefit for you (and your siblings if you have them) if your parents don’t require nursing home care.

Speaking of siblings, you may also want to discuss shared responsibility for caregiving, financial or otherwise, if you have brothers and sisters. This can help prevent resentment from arising later if one of you is taking on more of the financial or emotional burdens associated with caring for aging parents.

If your parents took out a reverse mortgage to provide income in retirement, it’s also important to discuss the implications of moving to a nursing home. Reverse mortgages generally must be repaid in full if long-term care means moving out of the home. In that instance, you may have to sell the home to repay a reverse mortgage.

The Bottom Line

elderly woman in a wheelchair outsideFilial responsibility laws could hold you responsible for your parents’ medical bills if they’re unable to pay what’s owed. If you live in a state that has these laws, it’s important to know when you may be subject to them. Helping your parents to plan ahead financially for long-term needs can help reduce the possibility of you being on the hook for nursing care costs unexpectedly.

Tips for Estate Planning

  • Consider talking to a financial advisor about what filial responsibility laws could mean for you if you live in a state that enforces them. If you don’t have a financial advisor yet, finding one doesn’t have to be a complicated process. SmartAsset’s financial advisor matching tool can help you connect, in just minutes, with professional advisors in your local area. If you’re ready, get started now.
  • When discussing financial planning with your parents, there are other things you may want to cover in addition to long-term care. For example, you might ask whether they’ve drafted a will yet or if they think they may need a trust for Medicaid planning. Helping them to draft an advance healthcare directive and a power of attorney can ensure that you or another family member has the authority to make medical and financial decisions on your parents’ behalf if they’re unable to do so.

Photo credit: ©iStock.com/Halfpoint, ©iStock.com/byryo, ©iStock.com/Halfpoint

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Source: smartasset.com

Budgeting

Financial Advice Keeping You Broke & In Debt

The post Financial Advice Keeping You Broke & In Debt appeared first on Penny Pinchin' Mom.

Financial advice is great – when it is the right type of advice.  There are tips and strategies that can make you money.  However, there is also a lot of advice that will do nothing but keep you broke and in debt.  These are things you don’t want to listen to.

I remember when I was younger, my mom told me that I had to get a credit card because it would be important for any emergencies which came my way.  I followed her advice and got a credit card. And, wouldn’t you know it, the first time I used it was for an emergency. Or, what I thought was an emergency.

I woke one snowy morning and someone had hit my car — and fled. No note on my windshield.  Just a dented door with green paint. I was devastated.  I had worked so hard to afford that car.  Now, here I was having to pay money to get it back to the condition it once was.  Since I was broke, I followed my mom’s advice.  I used my credit card.

I remember watching it go through the reader.  I signed my name and I was done.   When the bill came the following month, I paid that minimum payment. I decided that credit cards were pretty slick!  They were simple to use and it was the way to get what I wanted now and I could just pay for it later.

In hindsight, my mom would have been better to teach me the importance of saving.  That way, I would have cash on hand to cover my emergencies and not rely on plastic.

Sadly, this is the way many people live their financial life. The take the advice of friends and family and follow it rather than listening to financial experts.  Here are some common financial advice myths.

 

BAD FINANCIAL ADVICE YOU MAY BELIEVE

1. Some debt is good to have

I hear time and time again that you have to have debt in order to have a good credit score.  That type of financial advice is pure nonsense.

There is no such thing as “good debt.” Debt is money you owe someone and it is never a good thing. It is, however, sometimes necessary in order to purchase a house or a vehicle.  While not what one would call good debt, it may be a debt you need to have in order to live.

The type of debt no one should have is credit card debt.  Ever.  There should never be any instance where you owe more on your credit card in any given month than the amount of money you have in the bank to pay it in full.

Continuing to accrue debt that you can not pay in full each month makes no sense at all.

 

2. You need a credit card for an emergency

My story above is all too common for many.  The opposite is true.  You can have a credit card, but should not use it only for an emergency.  However, if that is how you plan to pay for emergencies, you are setting yourself up for financial trouble.

We all know that emergencies will happen.  There is nothing we can do to prevent them.  However, the smart thing to do is to plan ahead for the unknown.  This is why a fully funded emergency account makes more sense than a credit card.

If you think about it, having to deal with the stress of the situation is bad enough.  Add to it the thought of increasing your debt in order to deal with it just makes the situation a work.  Now, you not only had to deal with the broken furnace but now, you will have to find a way to pay for it as your monthly bills just went up.

Your emergency fund will come to your rescue when it is needed.  Knowing the funds are there to help cover those expenses will instantly make you feel better when dealing with a stressful situation.

 

3.  Leasing a vehicle is better

This is the one that makes me scratch my head.  When you lease a vehicle, you never own it.   Instead, you are stuck in perpetual car payments. How does that make any sense at all?

The common reason many say they lease is that they don’t have to worry about having an older vehicle.  They know that they are driving a new vehicle every few years.  The truth is, if you take care of your car, your vehicle can last you for years.  I drove our minivan for more than 13 years!  And, when I was ready for an upgrade, my vehicle was 3 years old.  Nothing new here!

If you lease a vehicle for 3 years at $300 a month, you will pay nearly $11,000 to drive the vehicle.  At the end of 3 years, you give it back. You have nothing to show for it.  You have just thrown away $11,000.  Now, you have to either lease again or decide to purchase your vehicle.  You are starting over on those payments.

However, had you purchased a vehicle that would offer you the same monthly payment of $300 for 3 (or even 4) years, you would own your car.  You now have $300 a month income freed up to do with what you wish.

The smart move would be to save that $300 monthly amount so that in 8, 9 or even 10 years when you need a new car, you can pay for it in cash.  This money will also more than cover some of the repairs that may be needed as your vehicle ages.

 

4.  Renting is throwing your money away

If you rent, you probably this financial advice frequently.  It is common for people to feel that it makes more sense to buy a house as your money is going to build up equity in your property.  And, truthfully, for some people renting is a waste of money.

But not for all.

There are situations where you do not have the funds for your down payment.  It could also be a time in your life when you know there will be the potential for relocating to a new city or venturing down a new career path.

By renting, you also avoid the additional costs of home maintenance, insurance, and other expenses which go with owning a home.

The best way to know this one is to look carefully at your own budget and personal situation. If renting works for you, then that is the path you should follow.

 

5.  You should always buy a new car

Turn on any television program and you will see ads sharing low-interest rate payments to lure you into wanting that new car.  These ads make it sound extremely affordable and tempting.  But don’t fall for it.

The truth is that when you purchase a new car, it will depreciate most quickly in the first few years you own it.  In fact, most cars will lose half their value every four years.  For instance, if your car is $25,000 brand new, in just four years it will be worth $12,000.  Add another four years and now the car is worth just $6,000.

You should not be a car that is too old.  Instead, purchase a late model car with lower miles. It will cost less to operate and will more quickly pay for itself.

 

6.  You must go to college

Many high school students believe that they must go to college when they graduate. However, that is not necessarily the right decision for everyone.  Not all careers or jobs will require a college education.  And, if you do not have the funds to pay for it, you can certainly rack up quite a bit of student loan debt.

If you happen to select a career that requires a secondary education, then it can be worth the cost. But, make certain you have the passion needed to carry you through.  Otherwise, you may find yourself amongst the nearly 60% who drop out, you will find yourself left with a mountain of student loan debt and nothing to show for it.

Rather than attend a college, consider a trade school instead.  Or, if you know for sure you do want to go to school, spend some time trying different jobs to figure out where your passion lies.  There is no rule that says you have to start college immediately after you finish high school.  Know what you want to do and then decide where to go for your education.

Getting financial advice from family and friends, be it solicited or not, can be helpful.  However, just make sure that what they say makes sense and do your homework.  Following what they say can often lead you down a path of increased debt and unhappiness.

Please note that I am not a certified financial advisor and the information shared on this site is based on my personal experiences.   It is important you consult with a tax or financial professional for assistance for your financial situation.

The post Financial Advice Keeping You Broke & In Debt appeared first on Penny Pinchin' Mom.

Source: pennypinchinmom.com

Cash Back, Credit Cards

What Is Cash Back?

What Is Cash Back?

Cash back is a rewards benefit that many credit cards offer to cardholders. By taking advantage of it, you’ll receive back a prespecified percentage of certain purchases you make. Many credit card companies will provide higher cash back rates on certain types of purchases, such as airfare, gas, food and more. Cash back is just one way that credit cards offer rewards, as mileage and points are some alternatives.

Before you spend too much money with your credit cards, make sure you have a financial plan in place. Speak with a financial advisor today.

What Is Cash Back?

The most commonly recognized style of cash back is what you have likely seen advertised as cash back credit cards. This specifically refers to earning a certain percentage of your credit card purchases back as cash rewards. However, cash back rates vary widely, as do the categories that they apply to.

You usually won’t see credit card cash back rates higher than 5%, while 1% is the typically minimum you will earn. Cash back categorization is significantly more complex though, with a merchant category code (MCC) system being the main organizing force.

MCCs run the entire cash back industry, as they ultimately decide how each purchase you make is classified. These designations coincide with cash back rates set by the issuer of your card. For example, you could use your card for a $50 dinner at a steakhouse, which has a “restaurant” code. If your card offers a 2% cash back rate on all spending at restaurants, you’d earn $1 cash back.

Familiar alternatives to cash back include point- and mile-based programs, though many cardholders are partial to cash back. Cash back affords cardholders an independence that is ideal, since you can redeem it for nearly anything.

Popular Cash Back Credit Cards

What Is Cash Back?

Discover, American Express, Mastercard and Visa all have cash back rewards credit cards available for prospective cardholders. Each abide by their own set of regulations, though card issuers decide on cash back rates, promotions and bonuses. Chase, Wells Fargo, Citi and Capital One represent some of the most active card issuers on the market today.

Below are a few examples of what you can expect to earn when looking for a cash back credit card:

Cash Back Credit Cards Card Name Cash Back Rates Cash Back Bonus Costco Anywhere Visa Card by Citi 4% cash back on eligible gas up to $7,000 per year, 3% cash back on eligible travel and restaurants, 2% cash back in-store and online with Costco and 1% cash back elsewhere None Bank of America® Cash Rewards credit card 3% cash back in a category of your choosing, 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases (up to a quarterly cap of $2,500 in combined grocery/wholesale club/choice category purchases) $200 bonus cash back for spending at least $1,000 over your first 90 days Capital One® Quicksilver® Cash Rewards Credit Card Unlimited 1.5% cash back everywhere $150 cash back bonus when you spend $500 during your first three months Citi Double Cash Card 1% cash back on your purchases and another 1% cash back when you pay your bill None Capital One® Savor® Cash Rewards Credit Card Unlimited 4% cash back on dining and entertainment, 2% cash back on groceries and 1% cash back elsewhere $300 cash back bonus for $3,000 spent over your first three months TD Cash Visa® Credit Card 3% cash back on dining, 2% cash back at supermarkets and 1% cash back on everything else Earn $150 cash back when spending $500 within the first 90 days (See Terms) USAA Preferred Cash Rewards Visa Signature Unlimited 1.5% cash back on everything None Blue Cash Everyday Card from American Express 3% cash back on up to $6,000/year at U.S. supermarkets (then 1%), 2% cash back at U.S. gas stations and select U.S. department stores and 1% cash back on other purchases $150 bonus cash back for spending $1,000 over your first six months Getting Cash Back at Retailers

What Is Cash Back?

Picture this: you’re buying some groceries on a Sunday morning, but know you’ll need $40 cash to fill up your car with some gas later. You could swipe your debit card at the supermarket and then head over to the ATM. Or you could ask for cash back right from the cashier, eliminating the extra errand.

The above situation represents the alternative definition of cash back. It’s ultimately the use of a cash register as if you were swiping your debit card at the ATM. When you request cash back from a cashier, your bank account will be charged the amount you asked for. This enables the funds to be pulled from your account so the cash can be placed in your hand.

Although this generally only applies to debit cards, there are a few exceptions for credit cards. Discover® allows cardholders to ask for cash back at more than 50 large retail stores without a transaction fee.

Bottom Line

There are many benefits to utilizing credit card rewards programs. But spending money that technically isn’t yours will always involve some level of risk. If you’re in good financial shape, though, cash back and other types of credit card rewards can help you take more vacations, save money on purchases and more.

Credit Card Tips

  • Managing your credit cards and any debt you accumulate using them is a major part of your long-term financial outlook. Consider working with a financial advisor to make sure you’re managing your money with your goals for the future in mind. SmartAsset’s free matching tool can connect you with up to three advisors in your area. Get started now.
  • If you’re someone who wants freedom when spending credit card rewards, you may prefer cash back to a points- or mileage-based reward system. However, keep in mind that cash back rates are sometimes less than those in point-centric programs.

Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

Advertiser Disclosure: The card offers that appear on this site are from companies from which SmartAsset.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). SmartAsset.com does not include all card companies or all card offers available in the marketplace.

Photo credit: ©iStock.com/SIphotography, ©iStock.com/MJ_Prototype, Â©iStock.com/Juanmonino

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Family Finance, Personal Finance, Real Estate

What Does a Real Estate Attorney Do?

If you’re planning to buy or sell a house or a rental investment property, you might consider hiring a real estate attorney.

A real estate lawyer can provide legal protection. They can help you navigate the home-buying process, which can be complex.

In fact, many states require a real estate lawyer to be present at closing. 

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Even if you live in a state that doesn’t require you to have a real estate attorney, it’s important to have one by your side.

But it’s also important to know who you’re dealing with, what they can do for you, and what’s in it for them.

Real estate attorneys can help structure transactions and closing. They will review documents well in advance before the closing to make sure there are no errors.

Real estate lawyers, however, can only represent one of the parties. The buyer and the seller’s interests can often be in conflict. Therefore, the attorney should never represent both parties. 

Besides representing you in sales transactions, real estate attorneys can represent you in a courtroom as well.

During the home-buying process, disputes between the buyer and the seller may arise that will have to settle in court.

The real estate attorney’s qualifications

A real estate attorney, just as any lawyer, has attended 3 years of law school. In law school, they take courses in law in general, including real property and other real estate classes.

During law school, they may do internships at law firms which specialize in real estate law.

Once they graduate law school, they take to bar exam in the state they want to practice in.

Once they become licensed to practice, they can work in a law firm specializing in real estate law.

The real estate lawyer’s fees

A real estate attorney can charge by the hour or a fixed fee. How much their charge for their services depends on their reputation, their level experience, the level of complexity.

Regardless of the fee, your attorney will discuss it with you. Their hourly fee is typically between $150 to $350.

They’ll draft a retainer agreement and make the necessary disclosures before you can retain them.

The attorney’s role in real estate transaction

Real estate attorneys can have many roles. Their roles will vary depending on whether it is a simple transaction or a complex one, and whether a real estate broker is involved.

In some cases, a real estate broker can handle many aspects of real estate transactions. If that case, the real estate attorney’s role is often limited.

In other instances, the real estate lawyer plays a crucial role in all phases of the real estate transaction.

Nonetheless, a real estate attorney’s roles include acting as a legal counselor, negotiator, advisor and coordinator.

Real estate attorney as a legal counselor

A real estate attorney acting as a legal counselor can handle drafting the proposed contract. If there is a broker involved, the broker will prepare the contract.

But, your attorney will review it for any proposed changes. Your lawyer can also draft the deed and examine title documents.

If you retain a real estate agent or broker, your attorney may also review the broker’s agreement before you sign it.

Real estate attorney as a negotiator

If you hire a real estate lawyer before you sign a contract or before engaging in any contract negotiations, your attorney will assume that role. All communications from the other party or his or her attorney will be directed to your lawyer.

Your attorney will negotiate proposed changes to the contract, including the price of the house. They will review any mortgage contingency clauses.

In addition, your real estate attorney can negotiate the following matters:

  • Personal property to be included;
  • Repairs before closing;
  • The closing date;
  • You may not get a mortgage commitment within the stipulated date in the contract. So, your attorney may negotiate an extension of time to obtain the mortgage;
  • You may need an early possession of the house. Your lawyer can negotiate that.

Real estate attorney as an advisor

You, as a client, may not need strict legal advice. You may just want your lawyer to be present for general advice. If you’re a first time home buyer or an elderly buyer, your attorney can also act as an advisor.

Real estate attorney as a coordinator

Your attorney can also act as your coordinator. Residential closings involve a lot of steps. And not everyone involved will follow them.

So, one of your real estate lawyer’s role is to contact the brokers, the title insurers, the mortgagees. They will also monitor the progress of obtaining financing, title policy, etc.

They will also contact the other attorney to make sure all parties are ready for the closing.

Your attorney’s responsibilities before closing

If you hire a real estate lawyer to represent you either as a seller or buyer, his or her responsibility before closing include the following:

  • Make sure you, as a buyer or seller, can fulfill the requirements imposed by the real estate sale contract
  • Review the title insurance;
  • Check the mortgage commitment;
  • Monitor status of the contract contingencies;
  • Examine closing documents for accuracy;
  • Coordinate closing date and time with the mortgage lender, seller and buyer’s broker;
  • If buyers will not attend the closing, obtain power of attorney for property to cover documents to be signed at closing;
  • Get wire instructions for payment of balance due at closing

In case a dispute arises between the parties, the real estate attorney can represent you in court.

Issues that might arise include damages and earnest money forfeiture, specific performance, misrepresentation, etc.

Do I need a real estate attorney?

Some states require a real estate attorney to be present during closing. They include Massachusetts, Maine, Alabama, Connecticut, Delaware, Georgia, Florida, Kansas, Kentucky, Virginia, West Virginia, South Carolina, Rhode Island, Pennsylvania, New York, North Dakota, Mississippi, New Hampshire, and New Jersey.

If you don’t live in any of these states and the District of Columbia, it’s really up to you if you want to hire a real estate attorney. If you’re just trying to save money and can barely afford to buy a house, you’re probably don’t need a real estate lawyer.

But if your real estate transaction is complex, a good real estate attorney can be an asset.

The bottom line…

Some states do not require you to have a real estate attorney during closing. However, it’s worth the cost hiring one especially if you’re buying a house in foreclosure.

Work With A Financial Advisor Near You

If you have questions beyond hiring a real estate attorney, you can talk to a financial advisor who can review your finances and help you reach your goals. Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goalsget started now.

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Source: growthrapidly.com

Credit Cards, Financial Advisor, Financial Planning, Retirement

How Much Is Enough For Retirement?

If you’re thinking about how much is enough for retirement, you’re probably contemplating a retirement and need to know how to pay for it. If you are, that’s good because one of the challenges we face is how we’re going to fund our retirement.

Determining then how much retirement savings is enough depends on a number of factors, including your lifestyle and your current income. Either way, you want to make sure that you have plenty of money in your retirement savings so you don’t work too hard, or work at all, during your golden years.

If you’re already thinking about retirement and you’re not sure whether your savings is in good shape, it may make sense to speak with a financial advisor to help you set up a savings plan.

Check Out Now

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How Much Is Enough For Retirement?

Your needs and expectations might be different in retirement than others. Because of that, there’s no magic number out there. In other words, how much is enough for retirement depends on a myriad of personal factors.

However, the conventional wisdom out there is that you should have $1 million to $1.5 million, or that your retirement savings should be 10 to 12 times your current income.

Even $1 million may not be enough to retire comfortably. According to a report from a major personal finance website, GoBankingRates, you could easily blow $1 million in as little as 12 years.

GoBankingRates concludes that a better way to figure out how long $1 million will last you largely depends on your state. For example, if you live in California, the report found, “$1 Million will last you 14 years, 3 months, 7 days.” Whereas if you live in Mississippi, “$1 Million will last you 23 years, 2 months, 2 days.” In other words, how much is enough for retirement largely depends on the state you reside.

For some, coming up with that much money to retire comfortably can be scary, especially if you haven’t saved any money for retirement, or, if your savings is not where it’s supposed to be.

Related topics:

How to Become a 401(k) Millionaire

Early Retirement: 7 Steps to Retire Early

5 Reasons Why You Will Retire Broke

Your current lifestyle and expected lifestyle?

What is your current lifestyle? To determine how much you need to save for retirement, you should determine how much your expenses are currently now and whether you intend to keep the current lifestyle during retirement.

So, if you’re making $110,000 and live off of $90,000, then multiply $90,000 by 20 ($1,800,000). With that number in mind, start working toward a retirement saving goals. However, if you intend to eat and spend lavishly during retirement, then you’ll obviously have to save more. And the same is true if you intend to reduce your expenses during retirement: you can save less money now.

The best way to start saving for retirement is to contribute to a tax-advantaged retirement account. It can be a Roth IRA, a traditional IRA or a 401(k) account. A 401k account should be your best choice, because the amount you can contribute every year is much more than a Roth IRA and traditional IRA.

1. See if you can max out your 401k. If you’re lucky enough to have a 401k plan at your job, you should contribute to it or max it out if you’re able to. The contribution limit for a 401k plan if you’re under 50 years old is $19,000 in 2019. If you’re funding a Roth IRA or a traditional IRA, the limit is $6,000. For more information, see How to Become a 401(k) Millionaire.

2. Automate your retirement savings. If you’re contributing to an employer 401k plan, that money automatically gets deducted from your paycheck. But if you’re funding a Roth IRA or a traditional IRA, you have to do it yourself. So set up an automatic deposit for your retirement account from a savings account. If your employer offers direct deposit, you can have a portion of your paycheck deposited directly into that savings account.

Related: The Best 5 Places For Your Savings Account.

Life expectancy

How long do you expect to live? Have your parents or grandparents lived through 80’s or 90’s or 100’s? If so, there is a chance you might live longer in retirement if you’re in good health. Therefore, you need to adjust your savings goal higher.

Consider seeking financial advice.

Saving money for retirement may not be your strong suit. Therefore, you may need to work with a financial advisor to boost your retirement income. For example, if you have a lot of money sitting in your retirement savings account, a financial advisor can help with investment options.

Bottom Line:

Figuring out how much is enough for retirement depends on how much retirement will cost you and what lifestyle you intend to have. Once you know the answer to these two questions, you can start working towards your savings goal.

How much money you will need in retirement? Use this retirement calculator below to determine whether you are on tract and determine how much you’ll need to save a month.

More on retirement:

  • Find Out Now 7 Questions People Forget to Ask Their Financial Advisors
  • 7 Mistakes Everyone Makes When Hiring a Financial Advisor
  • Compare Fiduciary Financial Advisors — Start Here for Free.
  • 7 Situations When You Need a Financial Advisor – Plus How to Find One Read More
  • 5 Tips to Optimize Your Retirement Account Withdrawals Read Now
  • People Who Retire Comfortably Avoid These Financial Advisor Mistakes

Working With The Right Financial Advisor

You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

The post How Much Is Enough For Retirement? appeared first on GrowthRapidly.

Source: growthrapidly.com

Credit Card Guide, Estate Planning

A Guide to Schedule K-1 (Form 1041)

Man prepares his tax returnsInheriting property or other assets typically involves filing the appropriate tax forms with the IRS. Schedule K-1 (Form 1041) is used to report a beneficiary’s share of an estate or trust, including income as well as credits, deductions and profits. A K-1 tax form inheritance statement must be sent out to beneficiaries at the end of the year. If you’re the beneficiary of an estate or trust, it’s important to understand what to do with this form if you receive one and what it can mean for your tax filing.

Schedule K-1 (Form 1041), Explained

Schedule K-1 (Form 1041) is an official IRS form that’s used to report a beneficiary’s share of income, deductions and credits from an estate or trust. It’s full name is “Beneficiary’s Share of Income, Deductions, Credits, etc.” The estate or trust is responsible for filing Schedule K-1 for each listed beneficiary with the IRS. And if you’re a beneficiary, you also have to receive a copy of this form.

This form is required when an estate or trust is passing tax obligations on to one or more beneficiaries. For example, if a trust holds income-producing assets such as real estate, then it may be necessary for the trustee to file Schedule K-1 for each listed beneficiary.

Whether it’s necessary to do so or not depends on the amount of income the estate generates and the residency status of the estate’s beneficiaries. If the annual gross income from the estate is less than $600, then the estate isn’t required to file Schedule K-1 tax forms for beneficiaries. On the other hand, this form has to be filed if the beneficiary is a nonresident alien, regardless of how much or how little income is reported.

Contents of Schedule K-1 Tax Form Inheritance Statements

The form itself is fairly simple, consisting of a single page with three parts. Part one records information about the estate or trust, including its name, employer identification number and the name and address of the fiduciary in charge of handling the disposition of the estate. Part Two includes the beneficiary’s name and address, along with a box to designate them as a domestic or foreign resident.

Part Three covers the beneficiary’s share of current year income, deductions and credits. That includes all of the following:

  • Interest income
  • Ordinary dividends
  • Qualified dividends
  • Net short-term capital gains
  • Net long-term capital gains
  • Unrecaptured Section 1250 gains
  • Other portfolio and nonbusiness income
  • Ordinary business income
  • Net rental real estate income
  • Other rental income
  • Directly apportioned deductions
  • Estate tax deductions
  • Final year deductions
  • Alternative minimum tax deductions
  • Credits and credit recapture

If you receive a completed Schedule K-1 (Form 1041) you can then use it to complete your Form 1040 Individual Tax Return to report any income, deductions or credits associated with inheriting assets from the estate or trust.

You wouldn’t, however, have to include a copy of this form when you file your tax return unless backup withholding was reported in Box 13, Code B. The fiduciary will send a copy to the IRS on your behalf. But you would want to keep a copy of your Schedule K-1 on hand in case there are any questions raised later about the accuracy of income, deductions or credits being reported.

Estate Income and Beneficiary Taxation

Woman prepares her tax returns

If you received a Schedule K-1 tax form, inheritance tax rules determine how much tax you’ll owe on the income from the estate. Since the estate is a pass-through entity, you’re responsible for paying income tax on the income that’s generated. The upside is that when you report amounts from Schedule K-1 on your individual tax return, you can benefit from lower tax rates for qualified dividends. And if there’s income from the estate that hasn’t been distributed or reported on Schedule K-1, then the trust or estate would be responsible for paying income tax on it instead of you.

In terms of deductions or credits that can help reduce your tax liability for income inherited from an estate, those can include things like:

  • Depreciation
  • Depletion allocations
  • Amortization
  • Estate tax deduction
  • Short-term capital losses
  • Long-term capital losses
  • Net operating losses
  • Credit for estimated taxes

Again, the fiduciary who’s completing the Schedule K-1 for each trust beneficiary should complete all of this information. But it’s important to check the information that’s included against what you have in your own records to make sure that it’s correct. If there’s an error in reporting income, deductions or credits and you use that inaccurate information to complete your tax return, you could end up paying too much or too little in taxes as a result.

If you think the information in your Schedule K-1 (Form 1041) is incorrect, you can contact the fiduciary to request an amended form. If you’ve already filed your taxes using the original form, you’d then have to file an amended return with the updated information.

Schedule K-1 Tax Form for Inheritance vs. Schedule K-1 (Form 1065)

Schedule K-1 can refer to more than one type of tax form and it’s important to understand how they differ. While Schedule K-1 (Form 1041) is used to report information related to an estate or trust’s beneficiaries, you may also receive a Schedule K-1 (Form 1065) if you run a business that’s set up as a pass-through entity.

Specifically, this type of Schedule K-1 form is used to record income, losses, credits and deductions related to the activities of an S-corporation, partnership or limited liability company (LLC). A Schedule K-1 (Form 1065) shows your share of business income and losses.

It’s possible that you could receive both types of Schedule K-1 forms in the same tax year if you run a pass-through business and you’re the beneficiary of an estate. If you’re confused about how to report the income, deductions, credits and other information from either one on your tax return, it may be helpful to get guidance from a tax professional.

The Bottom Line

Senior citizen prepares her tax returnsReceiving a Schedule K-1 tax form is something you should be prepared for if you’re the beneficiary of an estate or trust. Again, whether you will receive one of these forms depends on whether you’re a resident or nonresident alien and the amount of income the trust or estate generates. Talking to an estate planning attorney can offer more insight into how estate income is taxed as you plan a strategy for managing an inheritance.

Tips for Estate Planning

  • Consider talking to a financial advisor about the financial implications of inheriting assets. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. SmartAsset’s financial advisor matching tool can help you connect with professional advisors in your local area in minutes. If you’re ready, get started now.
  • One way to make the job of filing taxes easier is with a free, easy-to-use tax return calculator. Also, creating a trust is something you might consider as part of your own estate plan if you have significant assets you want to pass on.

Photo credit: ©iStock.com/fizkes, ©iStock.com/urbazon, ©iStock.com/dragana991

The post A Guide to Schedule K-1 (Form 1041) appeared first on SmartAsset Blog.

Source: smartasset.com

Credit Cards, Identity Theft

How to Contact a Real Person at a Credit Bureau

How to Talk to a Credit Bureau

The information that credit bureaus collect affects just about every aspect of your life. Whether you’re approved for a credit card, get a good mortgage rate, can rent an apartment or even get a job – they all can hinge to varying degrees on your credit score. So when a credit bureau has something wrong, it’s imperative that you tell them. The three major bureaus – Equifax, Experian and TransUnion – offer online services and prefer that you use their online forms instead of calling. But sometimes you need to talk to a live person. Here’s how to make contact.

Why Would I Need to Contact a Credit Bureau?

The three big credit bureaus or credit reporting agencies – Equifax, Experian and TransUnion – create credit reports that reflect consumers’ creditworthiness. The reporting agencies are for-profit businesses and sell their reports to other businesses, such as insurers, credit card companies, banks and employers.

These businesses in turn factor in these credit reports when making decisions such as whether to offer you a credit card and at what interest rate. So it’s  important to monitor your credit reports and make sure the information on them is correct. If you ever find a mistake, you should contact the credit bureau to correct the information. You may also need to contact to a credit bureau if you think that you’re a victim of credit fraud. That could mean placing a fraud alert on your account or freezing your credit so that no one can open a new line of credit in your name.

Talk to a Real Person at Equifax

talk to a credit bureau

Equifax has multiple phone numbers that you can use to speak with a real person. The number that you use will depend on what you need help with. We recommend trying to contact the correct number. If you call the wrong number, they will simply say they cannot help you and then direct you to call another number. You can find all of Equifax’s contact information on its website, Equifax.com.

If you want to contact Equifax with a general inquiry, you can reach the company via phone at the number 800-525-6285. Just make sure to call between the hours of 9 a.m. and 5 p.m. ET, Monday through Friday.

Equifax has also been in the news recently because it suffered a large data breach in 2017. If you have questions about whether your information was compromised in the breach, Equifax has a dedicated phone line at 888-548-7878. Again, be sure to call between 9 a.m. and 5 p.m. ET, Monday through Friday.

The table below has some common reasons why you might want to call Equifax and the number that you should call in order to speak with a representative.

How to Speak With a Real Person at Equifax Reason for Calling Phone Number General inquiries 800-525-6285 Canceling a product or service (Equifax customers) 866-640-2273 Request a copy of your credit report* 866-349-5191 Place a fraud alert on your credit card 800-525-6285 Dispute information in your credit report 866-349-5191 Place, lift or remove a freeze on your credit 888-298-0045 Dedicated phone line for information on the 2017 data breach 888-548-7878

*Don’t forget: You can get a free copy of your credit report three times per year.

Talk to a Real Person at Experian

Experian makes it relatively hard to talk to a real person on the phone. The company encourages people to use its website for most things. However, there are three main phone numbers that you should know if you want to talk to someone at Experian.

Call 888-397-3742 if you want to order a credit report or if you have any questions related to fraud and identity theft. The number 888-397-3742-6 (1-888-EXPERIAN) will also work. You can place an immediate fraud/security alert on your credit with this number.

If you have a question about something on a recent credit report (such as incorrect information), you will need to have a copy of the credit report. On the report you will find a 10-digit number. This number is different for each credit report and you will need it for the representative to help with any issues related to your specific report. Once you have that number ready, you can call 714-830-7000 with questions about your report.

If you need help with anything related to your membership account with Experian, you should call the company’s customer service at 479-343-6239. You will need to call while the Experian office is open in order to speak with someone. The hours are 9 a.m. to 11 p.m. ET, Monday to Friday, and 11 a.m. to 8 p.m. ET, Saturday and Sunday.

How to Speak With a Real Person at Experian Reason for Calling Phone Number Buying a credit report,

Placing a fraud alert on your credit file 888-397-3742 or

888-397-37426 (888-EXPERIAN) Question about a recent credit report 714-830-7000 Question about Experian membership account 479-343-6239 Talk to a Real Person at TransUnion

TransUnion has one general support number that you can use to talk to a human for help with your credit report (such as to dispute information, freeze your account, or report fraud), your credit score or any general questions. That number is 833-395-693800.

Note that a human representative is only available Monday through Friday 8 a.m. to 11 p.m. ET,  Monday through Friday.

You will hear an automated service when you first call this number. Press 4 in order to speak with a representative. Then you will need to press 1 if you have a TransUnion File Number or 2 if you do not have a number.

A TransUnion File Number is a unique identification number that you can find in the top right of your TransUnion credit report. You do not need a number to speak with a representative, but you will need it to do anything related specifically to your credit report. For example, the file number is necessary for disputing incorrect information.

The Takeaway

How to Talk to a Credit Bureau

If you ever need to buy a credit report or address an issue on your report, you will need to contact a credit bureau. Each of the three national credit bureaus, Equifax, Experian and TransUnion, has a website where you can do most things you may need to do. In fact, they prefer that you use online forms instead of calling. But sometimes it’s comforting to speak with a real person who can answer your specific questions.

The first step is figure out what phone number you need. The credit bureaus all have multiple numbers. Not all of the numbers will allow you to solve your specific issue. Of course once you have the right number, you will also need some patience. Hold times can be long, particularly during the coronavirus slow-down. The credit bureaus have also experienced higher phone traffic since the Equifax breach in 2017.

Tips for Using a Credit Card Responsibly

  • Correcting inaccuracies on your credit report by contacting a credit bureau can help to improve your credit score. Another potential way to improve your score is to get another credit card. It will increase your available credit and improve your credit utilization ratio. You can find the best card for you with our credit card tool. Of course, you should only get another card if you can responsibly handle the credit you already have.
  • One good piece of credit card advice is always to avoid as many fees as possible. Fees can make it harder for you to keep your spending down. Higher bills, in turn, could be harder for you to pay back in full. Here are 15 credit card fees that you should avoid.
  • It can be tempting to keep swiping your credit card, but make a budget and stick to it. A financial advisor can help you create a road map to make sure you’re hitting your goals and not getting into debt. SmartAsset’s free matching tool can help you find a person to work with. It will connect you with up to three advisors in your area.

Photo credit: ©iStock.com/Milkos, Â©iStock.com/sturti, ©iStock.com/fstop123

The post How to Contact a Real Person at a Credit Bureau appeared first on SmartAsset Blog.

Source: smartasset.com